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Benjamin Lawsky, head of the New York Department of Financial Services.

Last week a British bank was accused by a New York regulator of scheming with Iran, and leaving the U.S. financial system vulnerable to terrorists and weapons dealers. Today the bank agreed to pay $340 million to get those allegations dropped.

What happened? Why did the New York Department of Financial Services (DFS) say Standard Chartered engaged in money laundering involving $250 billion in transactions with one of the America's enemies then let it off with a measly $340 million settlement?

Last week, Benjamin Lawsky, the superintendent of the DFS threatened to revoke a banking license that would prevent Standard Chartered from doing business in New York. Today his office says a $340 million fine and the installation of a monitor at the bank will suffice.

“Standard Chartered got off easy. It should have been banned from doing business in the US. The fine was negligible. Although the monitor is helpful in preventing future non-compliance, what worse violation could there possibly be than what occurred?” says banking attorney Michael Horn.

In other words, it doesn't get much worse in banking than what Standard Chartered was being accused of so then why was the charter was not revoked. "If you're not going to revoke a bank charter for engaging in money laundering then why even have power to revoke these licenses in the first place?" Horn adds.

The DFS would not comment on the matter but a person close to the settlement says that the there's no suggestion of Standard Chartered continuing to engage in the dealings with Iran. "It would be a different story if Standard Chartered was still engaging in this activity," the person says.

Here are the terms of the settlement:

The Bank shall pay a civil penalty of $340 million to the New York State Department of Financial Services.

The Bank shall install a monitor for a term of at least two years who will report directly to DFS and who will evaluate the money-laundering risk controls in the New York branch and implementation of appropriate corrective measures. In addition, DFS examiners shall be placed on site at the Bank.

The Bank shall permanently install personnel within its New York branch to oversee and audit any offshore money-laundering due diligence and monitoring undertaken by the Bank.

Here's the real kicker in the settlement. The DFS notes that both it and Standard Chartered agree that "the conduct at issue involved transactions of at least $250 billion."